Coreweave (CRWV) stock has fallen more than 60% from its June record amid growing concerns that the AI infrastructure boom may have peaked.
New details reported Tuesday by the Wall Street Journal highlight how fragile the buildup has become as operational delays collide with high leverage and tight credit conditions.
According to the article, investors are increasingly focused on two core risks to CRWV. First, the company relies heavily on high-interest debt to fund its purchase of advanced AI chips from NVIDIA (NVDA). Second, the company relies on a few large customers such as OpenAI, Microsoft (MSFT), and Meta (META) for the majority of its revenue.
Part of CoreWeave’s problems stemmed from basic construction failures, the story continued. Severe storms in North Texas delayed concrete pouring at major data center sites and delayed delivery of computing power. This shows that even routine infrastructure bottlenecks can disrupt multi-trillion dollar AI investment plans.
Investor confidence further eroded in late October when Coreweave’s $9 billion acquisition of Core Scientific fell through. Core Scientific (CORZ), a former Bitcoin miner turned data center landlord, rejected the deal after warning that shareholders would be exposed to Coreweave’s volatile stock price and leveraged balance sheet.
Shares of Oracle (ORCL) and Broadcom (AVGO) have fallen by double-digit percentages over the past week following their recent third-quarter results, with both companies warning that the timing of their AI spending is overdue.
Bitcoin miners are feeling the pain
The spillover of cryptocurrencies and AI mining occurred as a result of new revenue diversification for Bitcoin miners. IREN (IREN) and Cipher Mining (CIFR) are pivoting to AI with a focus on high-performance computing and signing customers such as Microsoft. Both have fallen about 50% in recent weeks, after each had previously soared more than 500% this year. Another concern, however, is that the Bitcoin mining sector is increasingly relying on debt to fund expansion.
Coreweave stock fell another 4% on Tuesday, falling below $70 for the first time since May.